By Jhoo Dong-chanBanks and IT companies, including Shinhan Bank and NH NongHyup Bank, are gearing up to set up an internet-only bank after the National Assembly passed a bill to ease the related law allowing firms to own a larger stake in internet-only banks. Reflecting K Bank and Kakao Bank's case, however, observers say there are many hurdles, including how to differentiate internet-only banks from existing commercial banks.The moves of banks and IT firms came after Financial Services Commission (FSC) Chairman Choi Jong-ku's remark that he expects "preliminary approval to be granted for a third and fourth internet-only bank in April or May in 2019 after appropriate assessment procedures." Shinhan Financial Group, the bank's holding company, has already started on its plan to launch an own internet-only bank. Some local media recently reported the group is in talks with the nation's major IT giants such as Ticketmonster and Socar about a possible alliance, but the financial group denied it."Shinhan Financial Group is not discussing the issue with any IT firms at this point, but is positively reviewing the matter now," said a Shinhan Financial Group official."What really matters here is how to differentiate an internet-only bank from existing commercial banks. We are still analyzing the feasibility about its competitiveness."NH Nonghyup Bank, whose brokerage affiliate NH Investment & Securities already owns a 10 percent stake in K bank, also took a similar stance."We are positively reviewing the possibility," said an NH NongHyup Bank official."It will help attract young customers who are familiar with IT technology. What's important here is whether an internet-only bank can develop a competitive edge in the market."An industry insider says banks are interested in establishing internet-only banks but there are also hurdles."Expectations were very high when K bank and Kakao Bank were introduced last year. At the beginning, customers were also attracted to their non-face-to-face loan products," said NH NongHyup Bank loan department worker Roh Joon."However, commercial lenders have since introduced a series of their own non-face-to-face banking products similar to the ones of internet-only banks. From a customer's perspective, there is now no need to open a bank account or borrow money from internet-only banks anymore. They need to differentiate themselves from commercial lenders."Choi Saeng-rim, a Hanyang University business professor, claimed new internet-only banks should focus on the corporate banking sector."Existing internet-only banks are focusing mainly on retail banking," he told the Joongang Ilbo a local daily."For sustainability, new entrants should strengthen the corporate banking sector."Unlike lenders' positive but cautious approach, IT firms are more eager to set up an internet-only bank as they immediately started seeking a possible alliance to fill in for their weaknesses.Of the nation's IT firms, Interpark is the most active player. The online auction website and shopping mall previously formed a consortium with SK Telecom and NHN Entertainment but failed to launch an internet-only bank in 2015."If we find a proper partner, we are willing to invest more money in establishing an internet-only bank this time," an Interpark official said.Kiwoom Securities, which is considered to be a nonfinancial capital company because its largest shareholder is IT firm Daou Technology with a 47.7 percent stake, also failed to launch a bank in 2015, but is still interested in setting up an internet-only bank.The nation's largest portal service provider Naver said it is "unlikely" to join the competition, though, while mobile carrier SK Telecom is taking a wait-and-see stance.